Lumber giant Canfor Corp. (T.CFP) works to avoid B.C. strike

As lumber prices on the futures trading board at the Chicago Mercantile Exchange finally came in line with cash, when the September trading contract closed, producers and buyers this week feel increased confidence that the difficult times of the past five years might really be over, writes Keta Kosman in Madison’s Lumber Reporter http://madisonsreport.com.

Madison's reported last week a slight uptick in many solid wood commodity prices, explaining that increases are very unusual after the Labour Day long weekend, due to the usual seasonality of this business. That benchmark WSPF KD 2x4 #2&Btr popped another $10, to close this week at US$348 mfbm, provides only more evidence that stability is returning to the lumber marketplace.

Sawmills noted this week that lumber and panel demand from the US continues strong, even as China seems to be poised for increased buying through autumn. Order files for most solid wood commodities are out to the first or second week of October, providing mills with a certainty of sales volumes at least to that date. Prices, of course, will remain firm through that time.

At the moment almost all buying continues to be just-in-time; most players are not stocking up their lumber inventories. The supply-demand balance remains tenuous, yet thankfully for now there are no transportation issues looming which could throw a wrench in this delicately burgeoning recovery.

Labour issues in British Columbia, however, could come to a head very soon. The United Steelworkers' Wood Council issued 72-hour strike notice late Wednesday, on a very strong mandate from members, against Canfor Corp.'s (TSX: T.CFP, Stock Forum) Chetwynd and Plateau, BC, operations. The employers immediately requested mediation, meaning strike notice is frozen.

Both parties assured Madison's late this week that the intent is to get a settlement. Mediation should start September 23 and must legally conclude within ten days under normal circumstances. At issue remains a tricky disagreement over wages or lump-sum payments, which both the USW and Canfor maintain can come be resolved with the help of an impartial third party.

The union and company are negotiating to set a pattern agreement which will be used to renew labour contracts in BC's north interior and south interior bargaining regions.

The current contract expired in June. Once a pattern deal is set, publicly-traded companies to negotiate next are: Conifex Timber Inc. (TSX: V.CFF, Stock Forum), Hampton Lumber, and West Fraser Timber Co. Ltd. (TSX: T.WFT, Stock Forum) in the north; and Tembec and Weyerhaeuser in the south.